Casino cheating ruling redefines dishonesty test

A Supreme Court judgment that a professional gambler cheated his way to a £7.7m casino win could change the course of criminal trials by ruling that a 35-year-old test for dishonesty is no longer fit for use.

In Ivey v Genting Casinos Ltd t/a Crockfords, the court today unanimously dismissed an appeal from Phil Ivey to recover winnings from a 2012 game of punto banco in Crockfords Club, Mayfair. Ivey admitted relying on a technique called 'edge-sorting' - spotting tiny differences in the backs of playing cards - to tilt the odds in his favour.

Ivey did not touch any cards, but persuaded the croupier to rotate the most valuable cards by intimating that he was superstitious. He brought an action against the club after it refused to pay out on the grounds of cheating. He told the court that he regarded his technique as legitimate gamesmanship.

Upholding a judgment from the Court of Appeal, the Supreme Court said Ivey’s actions were ‘positive steps’ to fix the deck and therefore amounted to cheating, regardless of what he believed.

Phil Ivey

Source: Rex

But the court went further and said that the test for determining dishonesty should also apply to criminal trials - meaning there is no requirement for a defendant to appreciate that their actions were dishonest.

In judgment, the court said the two-stage test defined in 1982 R v Ghosh, has ‘serious problems’. That case involved a surgeon who was convicted for receiving payments for work carried out by others. The second stage in the Ghosh test asks juries to consider whether the defendant would have realised that ordinary honest people would regard his behaviour as dishonest. Today's judgment says that does not correctly represent the law and that directions based on it should no longer be given.

The Supreme Court said that the test means that the less a defendant’s standards conform to society’s expectations, the less likely they are to be held criminally responsible. ‘The law should not excuse those who make a mistake about contemporary standards of honesty, a purpose of the criminal law is to set acceptable standards of behaviour,’ the judgment states.

It adds: ‘There can be no logical or principled basis for the meaning of dishonesty to differ according to whether it arises in a civil action or a criminal prosecution.’

Instead, all cases should apply the civil action test - to ascertain the actual state of the individual’s knowledge or belief as to the facts and then determine whether his conduct was honest or dishonest by the standards of ordinary people.

Stephen Parkinson, head of criminal litigation at London firm Kingsley Napley, said this decision was one of the most significant in a generation and would lead to more convictions in criminal trials.

‘The concept of dishonesty is central to a whole range of offences, including fraud,' he said. 'For 35 years juries have been told that defendants will only be guilty if the conduct complained of was dishonest by the standards of ordinary reasonable and honest people and also that they must have realised that ordinary honest people would regard their behaviour as dishonest.The Supreme Court has now said that this second limb of the test does not represent the law and that directions based upon it ought no longer to be given by the courts.’

David Corker, partner at criminal law firm Corker Binning, agreed. 'This decision fundamentally changes one of the most basic facets of criminal fraud law: the meaning of dishonesty which can solely determine when an accused is guilty or not. Often in criminal fraud cases the facts - the actions of the accused - are agreed, it all depends on whether or not he acted dishonestly.'

Henceforth, he said, a prosecutor no longer has to prove that the accused had belief or knowledge of how their actions would be regarded. 'A prosecutor now need only place before the court facts of what the accused did, and thought, and invite the court to hold that he was dishonest. This is a huge shift towards an objective test of dishonesty, which is critical in fraud cases.'

This is about information and the assumptions about the information possessed by players of a game.

On the stock market, using inside information is penalised. That is a specific policy decision.

When you are selling a house or a car, you have more information than the buyer - you could be selling a something seriously flawed but the principle of caveat emptor applies (subject to the rules on misrepresentation of course)

There is no general rule against information inequality and attempts to create or maintain that inequality. Much commercial practice is surely about that.

It seems to me the court has done the gambling industry a huge favour by deciding that a game not played according to the chance/ information rules the house assumed to exist is potentially criminal and that someone who manipulates those rules by psyching out a member of staff is objectively dishonest.

Is counting cards now criminal?

There may well be other areas of life where attempts to gain an information advantage will now look risky in terms of committing fraud.

Have to disagree with Neil Hickman too. This was dishonesty: he manipulated the situation and covered up the reason by offering an innocent/false explanation which sought to deflect suspicion. Some may laud it as gamesmanship, but I think it is dishonesty. It was not skill that reversed the odds, it was dishonesty. He was not telling the truth when he said he was superstitious - that was a clear lie, and he accepted that.

Whether or not some regard it as skilful does not change the fact that it was dishonest.

Oh, dear. I agree with Mr Ivey (and Mr Hickman) that this was legitimate gamesmanship, not dishonesty. The odds are stacked in favour of the house, and if Mr Ivey has the skill to reverse that, good luck to him.

Neil's quote describes punto banco as a game "of pure chance, with cards...unknowable by the punters". This premise, on which the entire judgement appears to be predicated, is false. The cards may be unknown, but they are not unknowable. It is up to the professional gambler to know them (or at least to have a pretty shrewd idea).

I think Neil Hickman has hit the nail on the head. Why didn't the croupier say something along the lines of: 'I deal the cards as the house requires me to do. I'm not going to change it to suit the whims of every punter who comes along.'?

"...by ruling that a 35-year-old test for dishonesty is no longer fit for use. .."

And of course that direction was not of itself sufficient for 35 years?

Reminds me of the long tortuous process of trying to reconcile the mental element for murder / manslaughter during the 1960-1990 period, which was brought on by un-clarified utterings aside by some Judge or tow, that wanted the limelight.

"It is an essential element of Punto Banco that the game is one of pure chance, with cards delivered entirely at random and unknowable by the punters or the house".

That sentence from the judgment is central to the court's reasoning. And I am afraid I think it is a monumental piece of assuming what you are trying to prove.
You might say with equal accuracy that it is "an essential element" of Poker that the players have no information other than the cards in front of them and the mathematical odds; but everyone knows that part of the skill of players like Phil Ivey and Victoria Coren-Mitchell is their ability to draw inferences from their opponents' demeanour.
You might say that it is "an essential element" of Bridge that the players have no information other than the cards in front of them and the bidding; but it was said of one of the greatest Bridge players of all time that Helen Sobel seldom, if ever, misguessed a queen in a slam contract when she was playing against two men. Her trick was to lift her skirt a little above her knees. It never failed that the one with the queen of spades was too nervous to look around, but the one without the queen always looked.

The casino was quite happy to go along with Phil Ivey's requests about the sorting of the cards while they supposed he was a superstitious mug, seeking to cry foul and squeal "It's not fair!!" when the mug proved to be one step ahead of them. The appropriate response from the Supreme Court would, I suggest, have been that he who plays with fire cannot complain if occasionally he gets his fingers burned.

Mr Shaw, we should perhaps have mentioned that the case was among other things a test of Sections 334 and 335 of the Gambling Act 2005, which reverses the old presumption that gaming contracts are unenforceable. We plan to publish more expert comment on this judgment tomorrow.

Anonymous @ 15:40. That is a fundamental misapprehension as to what is a common law jurisdiction. If an issue has been previously decided, the judges follow it unless they can distinguish the current issue from the previous issue. If the law has been codified by act of parliament, SI etc., the judge follows the codification and applies that codification to the facts before him. If the law has not been codified and the issue has not previously been determined in precedent, then it is for the judge to find the law within the principles of our common law. That is not Mickey Mouse. It is what we live by and hold dear.

@ Jeffrey Shaw 14.32 - para 50 of the judgement contains the critical detail. The appellant fixed the deck before the match, thus was a cheater.

"50. The judge’s conclusion, that Mr Ivey’s actions amounted to cheating, is unassailable. It is an essential element of Punto Banco that the game is one of pure chance, with cards delivered entirely at random and unknowable by the punters or the house. What Mr Ivey did was to stage a carefully planned and executed sting. The key factor was the arranging of the several packs of cards in the shoe, differentially sorted so that this particular punter did know whether the next card was a high value or low value one. If he had surreptitiously gained access to the shoe and re-arranged the cards physically himself, no one would begin to doubt that he was cheating. He accomplished exactly the same result through the unwitting but directed actions of the croupier, tricking her into thinking that what she did was irrelevant. As soon as the decision to change the cards was announced, thus restoring the game to the matter of chance which it is supposed to be, he first covered his tracks by asking for cards to be rotated at random, and then abandoned play. It may be that it would not be cheating if a player spotted that some cards had a detectably different back from others, and took advantage of that observation, but Mr Ivey did much more than observe; he took positive steps to fix the deck. That, in a game which depends on random delivery of unknown cards, is inevitably cheating. That it was clever and skilful,and must have involved remarkably sharp eyes, cannot alter that truth..."

If I recall correctly, gaming contracts are anyway void/unenforceable for illegality. So why should someone 'cheating' (= improving the odds in his favour and away from a purveyor of void/unenforceable contracts) be guilty? Was the defendant 'dishonest' by the standards of reasonable people? Maybe not.